Pakistan’s finance ministry, central bank call country’s economic woes ‘temporary’

Federal Minister for Finance and Revenue Miftah Ismail (L) along with Bilal Azhar Kayani, Coordinator to the PM on Economy and Energy, are addressing a press conference in Islamabad, Pakistan, on 31 July, 2022. (Ministry of Finance)

• The country says its financing needs will be met under the IMF program during the current fiscal year
• Pakistan also expects its national currency ‘to appreciate in line with fundamentals’ in coming months

ISLAMABAD: Pakistan’s finance ministry and central bank said in a joint statement on Sunday the country’s economic problems were temporary and being forcefully addressed.
Pakistan is facing one of the worst economic crises in its history since its foreign exchange reserves have significantly declined and its national currency is under tremendous pressure.
Desperate for external finances, the government has been trying to revive an International Monetary Fund (IMF) loan facility amounting to $6 billion which was stalled after former prime minister Imran Khan’s administration went against its terms and conditions and offered energy and fuel subsidies.
Acknowledging these economic challenges, the joint statement maintained some encouraging developments had taken place in recent weeks that were expected to prove financially beneficial for the country.
“On July 13, the critical milestone of a staff-level agreement on completing the next IMF review was reached,” it noted. “As of today, all prior actions for completing the review have been met and the formal Board meeting to disburse the next tranche of $1.2 billion is expected in a couple of weeks.”
“At the same time,” the statement continued, “macroeconomic policies— both fiscal policy and monetary policy— have been appropriately tightened to reduce demand-led pressures and rein in the current account deficit.”
It added that Pakistan’s gross financing needs would be more than fully met under the ongoing IMF program during the current fiscal year.
The finance ministry and central bank maintained the policy decisions taken by the government were beginning to produce the desired results since the import bill fell significantly in July amid declining energy imports.
“The Rupee has overshot temporarily,” it said while discussing the rapid depreciation of the national currency, “but it is expected to appreciate in line with fundamentals over the next few months.”